Controversial cryptocurrency exchange World Exchange Services (WEX) recently saw the price of Bitcoin, the flagship cryptocurrency, surge to nearly $9,000 on its platform for no apparent reason, an event that saw critics sound the alarm.
According to CryptoCompare data, bitcoin is currently trading at about $6,190 after falling nearly 2.5 percent in the last 24-hour period. On WEX, the flagship cryptocurrency is trading at over $7,800, a 26 percent premium on the global average.
The premium affects other markets as well. Tether’s USDT, a token supposed to be backed by the US dollar at a 1:1 ratio, went above $1.7 on WEX, hinting something is going on with the exchange.
Various traders have attempted to jump on the seemingly profitable arbitrage opportunity the premium presents, while some point out that if it seems “too good to be true,” it usually is. If some critics are correct, those who deposit funds may never see them again.
Some believe the premium stems from the illiquidity in WEX’s fiat currency markets, as it charges hefty fees on withdrawals. Prominent bitcoin trader Kazonomics theorized the premium could be a sign of insolvency and the precursor to an exit scam.
Notably, WEX is a rebranded version of crypto exchange BTC-e, which was taken down by US authorities last year over alleged money laundering charges. A Russian national, Alexander Vinnik, was at the time arrested in Greece for allegedly laundering $4 billion through the exchange.
While authorities claimed Vinnik was an admin at BTC-e, the crypto exchange stated he never even worked there. Vinnik’s future was thrown into a legal turmoil as he is a Russian national arrested in Greece, yet the US wants to deport him. BTC-e managed to survive, but was hit with a $110 million fine.
It’s worth pointing out the price spike came shortly before WEX revealed it was going to undergo a “planned system maintenance” that’s set to last 2 hours.
Please pay your attention that on Thursday, July 12, 2018, WEX will undergo planned system maintenance. Maintenance will start at 10:00 AM UTC and should take up to 2 hours. Trading, withdrawals and other account functions might be suspended during this period.— WEX Official (@WEXnz) July 9, 2018
At press time the exchange’s website is up and running. Available data suggests its daily trading volume is of over $39 million. Most cryptocurrencies are still trading at a premium.